BANKERS throughout the UK are frantically manning the panic stations, but it won't be long before the search for a scapegoat to blame for the whole mess begins in earnest.
What is certain is that the banks must accept their part in this financial fiasco. Insolvency practitioners are in a unique position to see how banks lend, how their administration runs and how they receive payments for outstanding debt – and many banks are found wanting in all three departments.

Of course people should act responsibly when seeking debt, but there is a duty on banks also and they are bound by regulations and basic banking principals only to lend to those who can afford to pay them back.

One name seen frequently in insolvency cases in the last few years was that of Northern Rock, typically in relation to the 125 per cent mortgage product it offered. This may have been a viable product in times of burgeoning house prices and when sold to the right person, but too many people had applications accepted who were unable to meet the repayments. Now that house prices are falling they do not even have the luxury of being able to sell up and square off their debts.

Individuals left facing insolvency have a number of options open to them, including a debt management plan or, better, the Debt Arrangement Scheme, which freezes interest and pays the principal off over a period of time depending on what the debtor can afford. For those who cannot repay their debts in full there is the option of a Protected Trust Deed (PTD), where they pay what is affordable over three years and anything unpaid after that is written off.

When a debtor does go into an insolvency arrangement such as a PTD or bankruptcy, there is a statutory requirement for all creditors to back off and they may not pursue their debts further. Unfortunately, this requirement often seems to pass many banks by and they continue to pursue the debtor, often through third-party debt collection companies.

In spite of this over zealous approach, banks have repeatedly shown themselves incapable of administering and receiving the final payment once an insolvency has run its term and the dividend due to creditors has been calculated. If the dividend is not claimed, it is turned over to the Accountant in Bankruptcy and after seven years falls into the hands of the Crown.

With the wheels coming off firms across the financial markets, the first thing banks should do is tighten their practices and procedures.

Lending decisions have not been sufficiently controlled and insolvency proceedings are lost in the automated systems run by the banks. In turn people have taken on debt they cannot afford, the banks are not flexible enough to administer cases that go awry and are not ready to accept payment when it comes. Until these basic inefficiencies are sorted out, the banks cannot point the finger at anybody else for their current woes.

• John Shields is from Independent Insolvency Practitioners, a company operated co-operatively by 25 independent insolvency firms in Scotland.


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CRISIS club Livingston are teetering on the brink of financial meltdown.

Record Sport can reveal the Inland Revenue are threatening the First Division outfit with liquidation after they defaulted on their debt repayment plan.

The taxman has ordered the Italian owners of the Almondvale club to immediately cough up the money they owe, believed to be around £100,000, or a winding up order will be issued.

The Inland Revenue refused to comment, claiming they don't discuss individual cases, but it's believed they held summit talks with the owners - led by lawyer Angelo Massone - last week.

Sources claim Livingston have been given until next week to come up with the sums outstanding or the club could go to the wall.

It's understood Massone is trying to raise fresh finance less than six months after he led a buyout of previous owner Pearse Flynn.

However, co-partner Tomasso Angelini fiercely denied Livingston are in trouble with the Inland Revenue and threatened to sue if we ran with the story.

He said: "There is no such pending order from the Inland Revenue. We have absolutely no problems and make regular payments to them."

Flynn sold out for £1million in June because liabilities, which he insists were fully disclosed, far outstripped assets and disquiet has been growing in recent months about Livi's financial strength.

There are up to 100 creditors, many of them small, local businesses, who have still to be paid by the new owners.

One creditor, former club photographer and website administrator Alex Todd, revealed to Record Sport last month he has even considered freezing Livi's bank accounts.

Massone claimed never to have heard of Todd, who is owed around £1600, even though he sent him a letter three weeks earlier telling him to contact Flynn for his cash.

Massone later promised to look into his claims but last night Todd said: "I've had no contact whatsoever since with Massone or anyone else connected with Livingston."

Already this season there has been a delay in the payment of player bonuses and it is believed the wages of non playing staff were also up to a week late last month.

Angelini added: "We don't discuss internal matters or procedures."

Office and admin staff are holding their breath ahead of next Thursday when monthly salaries are due to be paid.

Our source said: "It's amazing they've kept it quiet for so long. Unless drastic action is taken immediately the club's future is in serious doubt."



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Three months after purchasing apparel chain Steve & Barry's out of bankruptcy, the new owners will liquidate the remaining 173 stores after plans to operate the chain fell victim to slumping retail sales and difficulty in getting financing.
Investment firms Bay Harbour Management and York Capital Management, which had bought the company for $168 million in August, plan to liquidate their holdings by early 2009, according to the company's Chapter 11 bankruptcy filing on Wednesday in Manhattan.
"This is the hardest environment in 30 years for retailers," said Peter Schaeffer, a partner with corporate restructuring and investment adviser Carl Marks. "Chances of companies that have filed for bankruptcy coming out whole is difficult."
BH S&B Holdings, the affiliate of the two investment firms, said in the bankruptcy filing the declining health of the U.S. economy and the slump in the retail market had hurt company revenue.
Sales at all stores have been disappointing, said the filing, citing "the general health of the American economy and the state of the retail market in particular."
Steve & Barry's had violated covenants under their senior secured credit facility and the owners have no prospects to obtain financing to keep operating the stores, according to court documents.
The company had already begun liquidation sales at about 67 stores.
Steve & Barry's, which began in 1985 as a retailer of university-branded clothing, became known for its branded apparel lines from celebrities including actress Sarah Jessica Parker, surfer Laird Hamilton and tennis star Venus Williams.
To differentiate itself, it sold almost everything in its stores for less than $11. At the same time, the chain aggressively negotiated with mall landlords for lower-than-average lease rates and expanded rapidly.
But the economic slump undermined already razor-thin margins, restructuring experts said.
"OBSESSIVELY FOCUSED"
"This business growth was obsessively focused on real estate growth and using recognizable faces to drive brand growth," said Matthew Katz, a managing director at restructuring firm AlixPartners. "In go-go growth years, the business was rewarded. However the underlining business processes and controls were not put in place and as the markets turned, this unraveled quickly."
The company has asked the court for permission to begin store-closing sales immediately because Thanksgiving and the crucial Christmas shopping season are rapidly approaching.
RAS Management Advisors LLC is serving as restructuring adviser, and a joint venture of liquidation firms led by Great American Group LLC and including SB Capital Group, Tiger Capital Group and Hudson Capital Partners will assist in the liquidation, the filing shows.
Separately, former employees of the chain on Nov. 18 sued the owners of Steve & Barry's, saying they were laid off the day before without 60 days advance written notice of their termination, as required by the Worker Adjustment and Retraining Notification Act.
An attorney for the company declined to comment.
The liquidation of Steve & Barry's is another blow for malls that are already losing a slew of tenants to bankruptcy liquidations, including home goods retailer Linens 'n Things and department store Mervyn's.
"In 2009, landlords are going to have to get creative to figure out what to do with the enormous amount of empty stores in their inventory," Schaeffer said.
Some 148,000 retail stores are expected to be shuttered this year, according to the International Council of Shopping Centers. That's the largest number since 2001 and represents at least 625,000 retail jobs. (Additional reporting by Jonathan Stempel; Editing by Lisa Von Ahn and Brian Moss)

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Unemployment will hit three million by 2010, a leading Stoke-on-Trent insolvency specialist has warned.

Bob Young, a corporate recovery expert and partner at Begbies Traynor, says the bottom of the recession is not yet in sight.

According to the firm’s own figures, a staggering 4,566 companies faced “critical” problems – those with county court judgments totalling over £5,000 or winding-up petitions against them – in the third quarter compared with only 791 in the same period last year.

Additionally, the number of companies with ‘significant’ problems – those with a court action and/or average, poor, very poor or insolvent or outdated accounts –nearly doubled to 58,564.

Mr Young, who is also president of North Staffordshire Chamber of Commerce, pointed out that insolvency statistics were a lagging indicator.

“The insolvency figures follow the economy by six to 12 months,” he said.

First come the job losses – in the Midlands the likes of Jaguar Land Rover, JCB and van maker LDV have announced big cuts in recent weeks.

Financial services posts among the major banks are being axed in their thousands across the country.

And the housing market has tumbled with estate agents, builders and the like all decimated.

Mr Young predicted Government insolvency figures – already on the rise – would be up again in the fourth quarter and higher still for the first quarter of next year.

And he cautioned that a recovery was unlikely until homes started moving once more.

“The economy is driven by property,” he said. “That is the sector which has to come back.

“But until the banks and building societies feel they can lend money again then things are not going to improve.”

Purchasers would only return at the point they felt the price fall had reached the bottom.

Many were struggling to get a mortgage or being told they could only have 75 per cent of what they needed. First time buyers could not get on the ladder.

“The market is in a desperate state,” he said.

And it had a spin-off into associated sectors – conveyancers, small builders, white goods, carpet sales and many others.

Mr Young went on: “In previous recessions it hurt and it shook out the weak ones. But the big problem this time is we are seeing a lot of good businesses failing.”

And that was simply down to cash – the lack of overall liquidity.

“People need to realise we are just going into the recession and they need to prepare for a fairly long and hard road.”

Government figures for the third quarter showed there were 4,001 compulsory liquidations and creditors’ voluntary liquidations in total in England and Wales on a seasonally adjusted basis. This was an increase of 10.5 per cent on the previous quarter and 26.3 per cent on the same period a year ago.

There were 27,087 individual insolvencies, a jump of 8.8 per cent and an increase of 4.6 per cent on the same period a year ago. This was made up of 17,341 bankruptcies – ahead 12.1 per cent on the previous quarter and 9.5 per cent on the corresponding quarter of the previous year, and 9,746 individual voluntary arrangements, up 3.3 per cent and 3.1 per cent respectively.

The unemployment rate was 5.8 per cent for the three months to September, up 0.4 per cent over the previous quarter and 0.5 per cent over the year. The number of unemployed people increased by 140,000 over the quarter and by 182,000 over the year, to reach 1.82 million.

The claimant count was 980,900 in October, up 36,500 over the previous month and up 154,800 over the year.

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The UK plastics and rubber industry is not faring as badly as other sectors in the economic downturn, latest business insolvency figures have revealed.

Only 28 businesses failed in the third quarter of 2008, compared to 26 during the same period in 2007, according to data by global information services Experian.


Altogether 96 plastics and rubber businesses went under in the first nine months of 2008, nine less than in the same period last year.


Yet, the study of 34 sectors shows there has been a total of 16,591 UK business failures so far this year – a leap of 22% on the same period in 2007.


Key sectors affected include business services with 1,284 insolvencies in quarter three 2008, up by 22.3%, taking the annual total for the sector to more than 3,550 failures. Building and construction saw 537 failures over the quarter, a rise of 22.9% with a year to date total of 1,564 failures.


Tom Pullen, md of Experian’s business information division, said: “Given the difficult trading conditions and rise in insolvencies, it is important that businesses take the right steps to safeguard the supply of their goods and services.


“The best approach is to continually monitor customers’ and suppliers’ commercial integrity against financial performance, credit risk information and payment behaviours. Access to this level of insight provides the intelligence to help businesses manage their exposure to risk.”



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BANKRUPTCIES have increased significantly in South East Cornwall as the economy slides into recession.
According to the South West Economic Review, insolvency rates are up 38% in the Caradon area, the fourth highest increase in the UK.
And it has been said that with low wage rates and high housing costs the people of Caradon are struggling more than ever.
Saltash Citizens Advice Bureau has seen an increase in inquiries relating to repossession and unemployment. Manager Christina Elia said: "We've also seen an increase in more affluent people who are in work and have a reasonable income but are finding it hard to cope with the rise in interest rates and the increased cost in living."
Statistics show that 16% of people in Caradon are self-employed. In Looe the figure is 25%.

In some cases the family home is also used to operate the business, which offers a substantial risk of losing both forms of economic security.
Brian Welsh, debt caseworker at Saltash CAB office said: "The implications of the credit crunch have had a significant impact on the volume and severity of debt inquiries at the bureau since the summer of 2007."
Mr Welsh explained that before the current crisis most debts were non-priority consumer credit such as unsecured loans, credit and store card debts.
But with the rising cost of living, priority debts are becoming more of a problem.
He added: "With the increased demands on the household budget, due to higher food, energy and fuel costs, it has become apparent that priority debt problems are surfacing in ever increasing numbers. These debts include rent, mortgage, council tax and utility bill arrears.
"None or reduced payments to these creditors can result in homelessness, loss of liberty and disconnection of utilities. People who are facing these types of problems are advised to address these priority debts first before trying to pay any non-priority creditors."
Latest figures from Cornwall Citizen's Advice Bureau show the number of clients with mortgage and secured loan arrears has shot up by 67%, while those with fuel debts have increased by 86%. Government figures reveal the number of house repossession claims issued in Cornwall and Devon went up by 41% this spring, compared with the same period last year.
Mr Welsh advises people to ask for help to sort out debt problems before they get out of control.
He added: "It is always best to seek help quickly before problems get worse and with Christmas around the corner it may be of some comfort to know that help is available if required. Professional advice can be obtained from money advice workers through the Citizens Advice Bureau, National Debtline and the Consumer Credit Counselling Service."


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A growing number of people in East Anglia are deciding to declare themselves bankrupt rather than wait to be pushed by creditors.

Analysis of the latest official insolvency statistics shows the number of people petitioning for their own bankruptcy at county courts across Norfolk, Suffolk and Cambridgeshire rose to 709 in the third quarter of this year - 10pc more than the same period a year ago.

The increase was most marked in Norwich, which saw 269 people petitioning for bankruptcy, a 36pc rise on the third quarter of 2007.

But the number of bankruptcy petitions in King's Lynn fell to 50 - a 17pc fall on last year - and to 111 Ipswich, down 8pc.

Nationally, the number of people in England and Wales declaring themselves bankrupt in the three months ending September 30 increased by 9pc to 14,369.

But there was a fall in the number of people using Individual Voluntary Arrangements (IVAs) by 4pc to 10,251 in the quarter July to September 2008.

Mark Sands, restructuring director with KPMG in Cambridge and East Anglia, said that combining the IVA and bankruptcy figures, 24,620 people “took the potentially life-changing step of placing themselves into personal insolvency”.

He added: “The downturn and the associated increases in unemploy-ment are starting to have an impact.

“This is being seen not only in the increase in people choosing personal insolvency but also in the related issues of increased mortgagee possessions and the greater use of charging orders by unsecured lenders who have not been paid.

“While consumers will fight to keep their family homes and both lenders and the courts have systems in place to ensure that possession is the last resort, once the property is sold there is often little reason for someone with other significant debts not to declare themselves bankrupt. For some the desperate step of selling their home before it is too late looks a forlorn hope in a property market which has almost ground to a halt.

“Many more homeowners will be hoping that the recent reduction in base rates will relieve the pressures on the household budget before they too need to resort to an IVA or take the ultimate step of petitioning for their own bankruptcy.”


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David Cassidy has been a well-known actor and singer for more than 30 years but fame did not bring happiness at first. He now has two children, son Beau, 17, and Katie, 21, and is married to Sue Shifrin.

How did your childhood influence your attitude to money?
My parents were poor starving actors. They divorced when I was three, and when I was five I moved in with my grandparents, who were a very hard-working blue-collar couple.

My grandfather had worked from the age of 18 with the New Jersey public service, reading meters. I remember him telling me that he once walked three miles through the snow to read a meter. His work ethic was impeccable.

The main principle my dad instilled in me was to tell the truth, and in work never give anything less than your best, finish the job and do it right.

Did this make you more cautious about money?
Even though he was very hard working, my father was very irresponsible with money. My parents weren't well-educated and neither was I. So without a proper education or a role model, although I had respect for the value of money, I wasn't very astute with it.

Have you ever been in debt?
I've been to the brink of financial ruin twice and come back. In the 1970s I made millions of dollars, but both times my business managers squandered and stole from me, ending up in jail for defrauding me.

I was one of the wealthiest young male entertainers in the world then, but 10 years later I had nothing to show for it. By the 1980s I was broke and had to rebuild my life.

What lessons did you learn from almost going bankrupt?
I started paying a lot more attention and becoming a lot more accountable for my bank balance.

I consolidated what little I had left and hired my cousin, who's an estate planner, and got a bookkeeper. I went through every bill and even now I have monthly meetings and pore over the statements of my incomings and outgoings with them.

My cousin is an upstanding Christian man who's turned my finances around completely and given me the stability to keep doing what I love – which is performing and writing.

Is there anything you hate about dealing with money?
Money is the root of all evil. It's the reason we're facing this current financial crisis. The heads of the Wall Street banks who took multi-million dollar golden parachutes need to go to prison for the mess they've left behind.

What's been your best buy?
I've been breeding and selling thoroughbred horses for 25 years. I've also got a house on the water in Fort Lauderdale, worth several million.

And your worst buy?
In the 1990s, I bought shares in internet companies, which became virtually worthless in the dotcom bust.

How do you prefer to pay for things – cash, card or cheque?
Credit card, which gets paid off at the end of every month. I've got two – one for business and one for personal use.

What sort of tipper are you?
I tip big, both because I can afford it and because I respect the people who give me good service. I do it because these are decent hard-working people and it makes a difference to them.

Do you bank online?
No. I use a small local bank.

Do you think pensions are a good idea?
I'd had a 401(k) – an American form of pension fund – but my old managers plundered it. I've built that back up, but I also have a diversified portfolio of bonds and international investments. This will pay me a percentage of my salary whenever I decide to retire – but that's a long way off yet.



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THE company which developed the former Warwick House department store in Malvern has gone into liquidation, owing £1m.

The company, Warwick House Investments Ltd, was voluntarily wound up at a meeting held in Worcester on Wednesday (November 12). MB Insolvency of 22 The Tything, Worcester, has been appointed liquidator.

Among the company's creditors are two Malvern estate agents, owed £11,770 and £1,150, and a locally-based building firm, owed £117,755.

Warwick House Investments Ltd was incorporated in 1993 by Richard Webb and a colleague in 1993 to buy and run the Warwick House shop.

After the department store shut its doors, the company was left with the property on Wells Road, and decided to convert it into flats.

The rebuilding work started in 2000 and did not finish until October this year, when the final apartment was finished and sold. Along the way, the company encountered problems with the building's foundations, which pushed up costs.

Despite the liquidation, residents of flats in Warwick House do not have to worry, says Roger Barter of Philip Laney and Jolly, which was the managing agent for the property.

He said yesterday (Thursday): "A new management company will be set up to handle the affairs of Warwick House, and all monies belonging to Warwick House are safely secured in client accounts. We hope to continue managing Warwick House with the new company." He added that the property is fully insured until next September.

Mr Webb could not be contacted yesterday for comment


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The number of people facing bankruptcy rose by 7% in the third quarter of the year, against the same period last year.

A total of 13,653 people in England and Wales petitioned for bankruptcy in the three months to the end of September, Ministry of Justice figures showed.

This is the second-highest number recorded by the Ministry of Justice since 1995.

There were also 3,184 company winding-up petitions, an increase of 13%.

The number of creditor petitions rose 10% to 5,499 in the quarter.

Analysts expect bankruptcies to rise as the downturn hits home.

The rise in the number of winding-up petitions was "a clear taste of things to come", said Howard Archer, chief UK and European economist at Global Insight.

"Individual bankruptcies are poised to surge over the coming months in the face of recession, faster rising unemployment, higher debt levels, very tight credit conditions and more and more people being trapped in negative equity," he added.

Insolvency rise

The Ministry of Justice figures show the number of people at the start of the bankruptcy process.

There has also been a sharp rise in the number of people and companies in England and Wales actually being declared insolvent - the end of the process.

Individual insolvencies went up by 8.8% in the third quarter of the year to reach 27,087, government figures showed earlier this month.

Corporate liquidations also went up by 10.5% in the same period, to 4,001.

The increases have been widely predicted because of this year's sudden economic downturn and the consequent rise in unemployment.

The rising trend started this year as the economy stated to slowdown under the impact of the credit crunch.

The number of firms being liquidated is now up by 26.3% on a year ago.



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JOBS at Greenlight TV may be at risk because the government did not give the company a contract to continue to provide TV coverage of the TT, said Douglas North MHK John Houghton.
He raised the issue in the House of Keys last week, asking Tourism and Leisure Minister Martyn Quayle to explain why the new TV contract was given to the London-based North One company rather than Manx company Greenlight TV.

In reply, Mr Quayle said the decision was made after a contract to provide TV coverage of the TT was put out to tender, a process that was accepted as a method by which the government could ensure that it was making the most of taxpayers' money.

'As part of the ongoing process to improve the commercial revenues generated by the Isle of Man TT Races, the department has reviewed all of the existing commercial contracts associated with the TT,' Mr Quayle told the House of Keys.

'Renewal of the TV contract was not an option as the previous extension terms under the contract had already been applied for the maximum term.

'The value of the contract meant that to comply with the government's financial regulations the new contract had to undergo competitive tender process.

'North One's tender stood out and was selected from a shortlist of four companies.'

Mr Quayle said he wanted to thank Greenlight TV for its contribution to promoting the TT but that the best tender was from North One.

He said that under confidentiality agreements it was not possible for him to release details of the North One contract or the rival bids.

But Mr Quayle added that North One was a world leader in sports coverage and the company offered the TT an opportunity to raise its profile even further.

The company's portfolio includes coverage of Formula 1 and the World Rally Championship.

He also said there was a possibility of North One opening a Manx base and creating jobs in the Island.

But Mr Houghton said that jobs may be at risk at Greenlight TV and that in the long term it could cost the taxpayer more money if jobs were to go than any possible benefits provided by the contract with North One.
The current television contract had been in place since 2001 but was due for renewal ahead of the 2009 TT races.

When the North One deal was announced in September, Mr Quayle said the company would 'revolutionise the television coverage of the TT' and would help to secure its long-term commercial future.

The television tender was the latest part of an ongoing programme of development for the TT that had seen new commercial contracts for sponsorship, merchandising and licensing, hospitality and marketing.

The event, which is run by ACU-Events Ltd, which took over from the Manx Motor Cycle Club, has UK firm Signature Sponsorship handling sponsorship, brands and corporate hospitality.

Public relations is handled by UK business Redpoint.

There has been much debate about many commercial aspects of the Isle of Man TT being taken away from Island businesses and given to overseas firms.

----------------

Goverment should do more to support local firms

A DIRECTOR of Greenlight TV has criticised the government for awarding a TT contract to a UK firm at a time when the Isle of Man's economy faces an uncertain future.

Richard Nichols said he didn't want to appear guilty of sour grapes over losing the contract, but felt the government should be doing more to support home-grown businesses.

He said it was especially important to protect jobs when there was uncertainty over the future of the Island's finance industry.

'Greenlight TV is a manufacturing industry which employs 25 people in the Isle of Man,' he said.

'I think it's wrong to award manufacturing jobs of any kind to off-Island companies.

'Greenlight pays an awful lot in tax and VAT and brings millions of pounds into the Isle of Man every year.

'The government argues that the North One contract offers a better deal for the taxpayer, but the government needs to see the bigger picture.'

Mr Nichols, who was speaking in response to a debate in the House of Keys about the contract being awarded to the London-based North One production company, said he was not just concerned about Greenlight TV but other firms in the Island who had seen government contracts awarded to off-Island firms.

'The TT is by no means the only thing we do, but as an Isle of Man company we were extremely proud to provide coverage of the TT,' added Mr Nichols.

'We were very surprised to lose the TT, we have pitched against North One on several occasions and always beaten them on price.

'Everyone at Greenlight TV lives in the Isle of Man, we don't have to pay for travel and hotel expenses, so it is very difficult to understand how a company based in the UK could be cheaper than us.

'Our proposal guaranteed the government a substantial sum of money running into hundreds of thousands of pounds over the period of the contract.

'We have always purchased the TT rights from the government, paid for the television coverage of the TT ourselves and then split the profit with the government.

'The contract with the government forbids us from disclosing what those numbers are.'

He added: 'The situation now (with North One] is that the government is going to pay for the television coverage and hope that enough money comes in to cover that.

'We have no one whose job is specifically dependent on the TT, but we were advertising for two new posts and as a result of losing the TT contract we will not now be able to take on those people.

'So two jobs have gone already.'

He said that while the company was disappointed to lose the TT contract he hoped it would not jeopardise the long-term future of the business.
Greenlight is the biggest producer of motorsport coverage in Britain and one of Europe's major motorsport producers.

The TT represented around 10 per cent of the company's total business.
He said Greenlight had its busiest year in 2008.

During the TT fortnight the company employed 70 people, mostly from the Isle of Man.

Responding to Tourism and Leisure Minister Martyn Quayle's suggestion that North One may open an Isle of Man base, Mr Nichols said it was highly unlikely that North One would employ as many Manx workers as Greenlight TV did.

Mr Nichols said he could not disclose the amount bid by his company to cover the TT in 2009 and beyond.

But he said that he would be happy to disclose details of the previous contracts if the government lifted the confidentiality clause.

WHAT DO YOU THINK?
Send your comments to newsviews@newsiom.co.im

YOUR COMMENTS

TO THE POLITICIANS, "WHAT ABOUT LOYALTY BY THIS COMPANY" HOW MUCH DID THEY PUT ON THAT IN THE TENDER PROCESS.
RR


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The number of companies going bust is expected to soar in the coming months after official figures showed corporate insolvencies had increased dramatically to their highest point for five years.

Company liquidations jumped by a quarter in the past three months as businesses struggled to cope with a slowdown in consumer demand, falling property values and tight credit conditions imposed by banks. The Insolvency Service said yesterday there were 4,001 voluntary and compulsory liquidations in England and Wales between June and September, a 10.5% rise on the previous quarter and an increase of 26.3% on the same period a year ago.

Personal insolvencies also rose strongly and were heading above 100,000 over the next year. There were 27,087 individual insolvencies in the three months to September, a rise of 8.8% on the previous quarter and an increase of 4.6% on the third quarter last year. Personal bankruptcies jumped by 17,341 while another 9,746 accepted an individual voluntary arrangement, the controversial payment plan with creditors that allows individuals in financial distress to avoid bankruptcy.

Opposition MPs said the figures represent a failure of government policy and confirmed that the economy was heading into recession.

The International Monetary Fund warned on Thursday that the UK would suffer most as the financial crisis gripped the world's rich economies and forced them to shrink for the first time since the second world war.

The Tory business spokesman, Alan Duncan, said a sharp rise in unemployment was "causing huge pain to already hard-pressed families and small businesses".

The Tories and Liberal Democrats argued the government had failed to support businesses during the downturn and to prevent a large rise in companies tipping over into insolvency.

Accountants Grant Thornton said yesterday's figures were "the tip of the iceberg". It said: "Genuine fears are now growing as to the depth and longevity of the impending recession. We predict significant increases in these figures in the next quarter and beyond."

The Insolvency Service said more businesses will go under in the coming months, despite a fall in oil prices and other costs. The Bank of England's 1.5 percentage point cut in base rates was unlikely to influence events in the short term. The Insolvency Service said: "Although lower energy and commodity prices are easing the pressure on input costs, company liquidations seem certain to surge over the coming months, given the likely depth and length of the recession."

Ministers have come under pressure to force high street banks to increase lending to small and medium sized businesses caught out by the credit crunch. Business secretary Peter Mandelson is due to meet bank executives later this month for a showdown over recent hikes in interest rates and restrictions on lending.



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FEWER construction firms went into liquidation in Scotland in the third quarter of this year than during the same period in 2007, despite the downturn in the house building industry.

Official Government insolvency figures show 16 construction companies went into voluntary or compulsory liquidation in the three months to the end of September, down from 20 last year and 17 in the previous quarter of this year.

In the first nine months of this year 64 construction firms fell into liquidation, compared with 65 in 2007.

But Matt Henderson, business recovery and insolvency partner with Johnston Carmichael, warned that the full impact of the credit crunch on the construction industry is yet to be felt.

"The floodgates are yet to open as there is generally a time lag of 12 to 18 months before economic downturns come through in the statistics for company failures," he said. "I know of a number of companies hit during October."

Last month house building firms Anderson Homes and Gregor Shore went into administration in Scotland.

Henderson added: "There is a lot of pressure building up, but the better advised companies will survive. The main casualties will be the workforce as firms cut jobs."

Ronnie Ludwig, a partner with accountancy firm Saffery Champness, is urging firms to treat redundancies as a last resort.

He said: "Having to consider redundancies is likely to be a new experience for many company bosses. However, the redundancy process itself can be costly and time-consuming and can also have unintended long-term costs."

Ludwig urged employers to think about recruitment fees and training costs when the business climate improves.

But Ernst & Young is warning that a further blow could be dealt to the construction industry by the Government if it presses ahead with plans to phase out national insurance contributions (NICs) on holiday pay. It estimates this will increase business tax costs by 12.8%.

Construction industry employers are currently able to pay into a holiday pot for employees without having to make an NIC. This tax exemption is due to be scrapped by 2012.

Lee Muter, a director in E&Y's tax team, said: "In an average-sized construction firm the phasing out of NIC on holiday pay could leave an employer with an additional monthly wage bill of £200,000."



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General Motors, the largest car maker in the US, which celebrated its 100th anniversary this year, said it will be bankrupt within months unless it gets government money to tide it over during the biggest economic crisis since the Great Depression of the 1930s.


The company has called off merger talks with its smaller rival Chrysler in order to concentrate on more urgent internal cost-cutting and on lobbying for a rescue from the US government.

With sales slumping across the world, GM's chief executive, Rick Wagoner, said it had burnt through $6.9bn (£4.4bn) in the three months to the end of September and had drawn on the last of its credit lines from its banks. With just $16.2bn left in the bank, and about $12bn of that needed as a cushion to fund its day-to-day operations, a day of reckoning is now within sight.

And GM didn't attempt to hide that fact. "Even if GM implements the planned operating actions that are substantially within its control, its estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business," it said.

"Looking into the first two quarters of 2009, even with its planned actions, the company's estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve, it receives substantial proceeds from asset sales, takes more aggressive working capital initiatives, gains access to capital markets and other private sources of funding, receives government funding under one or more current or future programmes, or some combination of the foregoing."

GM shares fell 9.2 per cent after being suspended pending the delayed announcement of its results yesterday.

"The third quarter was especially challenging for the auto industry," Mr Wagoner said. "Consumer spending, which represents close to 70 per cent of the US economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales."

Even those customers who might have felt confident enough to buy a car were denied financing, or found the cost of financing prohibitive in many cases, he added.

Mr Wagoner said those who suggest GM should be allowed to fail do not understand the knock-on consequences of bankruptcy, which would be felt well beyond Detroit, rippling through suppliers in 50 states. "The impact would be devastating for the US economy. I read the pundits, and I suspect these are the guys who said let Lehman Brothers go, too, and we see the impact that had."

GM sold 2.1 million vehicles worldwide in the third quarter, down 11 per cent on the same period last year, with western Europe sales suffering as hard as the US, and signs of new weakness in emerging markets. The company had a net loss of $2.5bn for the period, and revenue was $37.9bn, down from $43.7bn.

Mr Wagoner went to Capitol Hill on Thursday night – along with the bosses of Ford, Alan Mulally, and Chrysler, Bob Nardelli, and the United Auto Workers union leader, Ron Gettelfinger – to meet Democrat leaders and plead for federal aid. Congress has already voted them $25bn in loans to fund production of new low-emission vehicles, and the Big Three automakers are hoping for a further $25bn in bridge loans to see them through the downturn.

Although Nancy Pelosi, Speaker of the House of Representatives, and the Senate majority leader, Harry Reid, said the meeting had been constructive, they offered no explicit guarantees of help.

The question of what to do about the auto industry will be an early test of Barack Obama's presidency and his approach to economic and employment issues. The industry directly employs about 355,000 American workers, and it says that, through related industries that are dependent on auto manufacturing and sales, it supports about another 4.5 million jobs. Additionally, the three Detroit firms provide health care to around 2 million Americans, and pay pension benefits to 775,000 retirees or their survivors.

Over the past few months, the trio have considered a variety of merger combinations that would reshape the Detroit-based US car industry and allow them to slash costs. Most recently, GM has been in talks to buy Chrysler, but yesterday it said consideration of a strategic acquisition would be "set aside" to focus on "immediate liquidity challenges".

Chrysler is also haemorrhaging cash, and its chief executive rushed out a statement in response to the GM announcement. "We are significantly challenged by today's economic environment and by the automotive industry's unprecedented downturn," Mr Nardelli said. "As an independent company, we will continue to explore multiple strategic alliances or partnerships as we investigate growth opportunities around the world that would aid in our return to profitability."

Analysts had been sceptical about the benefits of putting GM and Chrysler together, saying that the disruption could be more damaging than the cost savings, even if the pair could find enough cash to write the necessary redundancy cheques.

Ford is also suffering badly, it was clear yesterday. The company, which raised cash in 2006 by mortgaging most of its assets, including the iconic blue oval logo, has enough cash to last through next year, but it reported a third-quarter loss of $129m and said it would cut 10 per cent of its white-collar staff.

"We continue to take fast and decisive action implementing ourplan and responding to the rapidly changing business environment,"said Mr Mulally.

Ford has been slashing production, particularly of its gas-guzzling pick-up trucks, which have fallen out of favour among US drivers since fuel prices rose.



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The number of individual insolvencies rose to 27,087 in England and Wales in the third quarter - an 8.8 per cent increase on the previous three months and 4.6 per cent more than during the same period a year earlier, according to the Insolvency Service.

At the same time, the number of companies put into administration rose by more than 50 per cent year-on-year to 1,007 in the three months to the end of September.

Financial experts warned the rise is just the beginning, with worse figures expected next year as the looming recession unfolds.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "There can be little doubt that the marked rise in the number of individual insolvencies in the third quarter is only the beginning of the storm."

Vicky Redwood, an economist at Capital Economics said: "With the full effects of the credit crunch and rising unemployment yet to be felt, bankruptcies are set to soar over the coming two or three years."

And Catherine Matthews, partner at licensed insolvency practitioners, Tomlinsons, said: "The latest insolvency statistics, up nearly 9 per cent on the last quarter, are grim indeed and confirm what we already knew: more and more people are struggling at the moment and getting into real financial difficulty.

"Unfortunately, I expect the rise in personal insolvencies to continue into 2009 as the recession spreads from the banking and property sectors into the broader economy.

"We're already seeing signs of this and urge people to take action as soon as possible if they are starting to struggle. The worst thing to do is stick your head in the sand and hope it will go away."


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COMPANY insolvencies rose by more than 35% in Yorkshire during the third quarter of the year, a survey has revealed.

Accountancy firm PericewaterhouseCoopers said that 479 businesses in the region became insolvent during the three months compared with 355 in the second quarter.

The failure rate was 65% higher compared with the third quarter of 2007 with builders, manufacturers and retailers the worst hit.

Steve Ellis, of PwC in Leeds, said: “We predicted in the last quarter that the small decrease in figures would be the calm before the storm.

“A 65% increase on the same period last year shows that the lack of confidence and capital is now impacting a much broader range of the economy than we have experienced to date.”



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Analysts predict the figures from the Government's Insolvency Service will show a 10 per cent rise between July and September compared with the previous quarter.

Around 27,000 people are thought to have entered various forms of insolvency agreement in that period including an estimated 17,000 declared bankrupt, according to predictions by accountants KPMG.

Another 10,000 are thought to have taken out an Individual Voluntary Arrangement (IVA), under which interest on debt is frozen in exchange for a set repayments.

It is powerful evidence of the financial crisis spreading from banks and City institutions to the so-called real economy.

By the end of the year as many as 110,000 people are expected to have declared themselves insolvent with a further dramatic rise after Christmas.

"During 2009, we think this figure is likely to dramatically increase to 150,000, as factors such as rising unemployment also start to take hold," Mark Sands, director of personal insolvency at KPMG, warned.

Meanwhile the number of business failures in Britain has risen by 40 per cent in a year with the insolvency rate in the property market almost tripling, according to separate estimates from PricewaterhouseCoopers.

The number of companies going into administration, receivership or liquidation is already thought to have reached levels not seen since the downturn in the "dotcom" industry at the start of the current decade but the situation is expected to worsen markedly in the coming months.

A total of 4,039 businesses in England and Wales entered various forms of insolvency in July, August and September of this year, a rise of 40 per cent on the same period last year and up 20 per cent on the previous quarter, PWC found.

In the property sector some 263 businesses faced collapse during that period, up 287 per cent on the same quarter last year, reflecting the sharp downturn in property prices and the effects of the credit squeeze on those trying to get a mortgage.

Barry Gilbertson, a partner in the PWC property team, said that a spike in property insolvencies in June shortly after the time when quarterly rents tend to fall due, suggests that landlords have been going out of business because their tenants can no longer pay their rent.

It was a similar pictures in hospitality and leisure where 234 companies entered insolvency, an annual increase of 55 per cent.

And while insolvency rates among retailers were at similar levels to the previous quarter of the year, it is expected to rise sharply after the Christmas sales period.

But manufacturing fared far better with failure rates at a five-year low thanks to the weakness of the pound against the euro and US dollar, making British exports cheaper.

Mike Jervis, a business recovery specialist at PWC, said that many companies may be opting to go into administration as a tactic to avoid complete collapse.

"Despite grabbing the headlines on an almost daily basis over the last quarter, insolvency is not necessarily viewed as a death sentence any more and businesses are seeing that insolvency techniques can be used as a mechanism to salvage and revitalise ailing operations," he said.


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The insolvency rate for small businesses could rise by as much as 41%, compared with 2007, in the space of a year according to a poll by insolvency trade body R3.

R3 polled 2,073 of its members which have suggested that insolvencies are likely to reach the peak levels last seen in the 1992 recession the Financial Times reported.

The survey highlights the gloomy state that insolvency practitioners are forecasting but also noted the 'worrying trends in practices of securitisation of debt'. More than half of the respondents saw a growing number of lenders securing debt against individual homes.

Nick O'Reilly, president of R3, said: 'What we are seeing now is a large number of repeat inquiries from people that might have come to you months ago. That’s one indicator of why we are predicting an increase.'

'The battle for credit has been lost and there is no way out of what is coming. Businesses and individuals will now have to face up to today’s tougher climate and seek professional advice as early as possible' he added.



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BUSINESS failures and personal insolvencies are set to rise dramatically over the next 18 months, a gloomy survey said today.

A poll by insolvency industry trade body R3 suggested the recession was only now taking effect and the economy would not begin to recover for another year and a half.

Peter Sargent, R3 spokesman for Huddersfield and Halifax, said: “For the past three or four years, a number of businesses that were not performing well have been kept alive artificially by the easy availability of credit, which has now dried up.

“Many smaller business owners have been borrowing to their limit, including using their personal credit cards to fund the business.”

Insolvency experts responding to the survey said they expected business failures to rise from the official figure of 13,091 in 2007 to almost 15,700 this year and 18,440 for 2009 – a 41% increase over the two-year period. However, one in five respondents thought that the figure would exceed 20,000 in 2009.

Although current levels of personal insolvency are already at record highs, insolvency experts predict these will continue to soar.

In 2007, there were 121,796 personal insolvencies. Respondents think by the end of this year, the total will reach 132,700 and 148,352 by the end of 2009.

“We would anticipate a nine-month lag, with a spike in the figures for the second quarter of 2009,” said Mr Sargent, of Begbies Traynor in Halifax.

“The route into personal insolvency is not an overnight process and unsurprisingly people put off dealing with financial problems until they have exhausted all other options.”

Over half of the 2,000 respondents (54%) said they were seeing an increase in the number of unsecured lenders – such as banks and credit card companies – trying to recover the money they are owed by taking security over people’s homes. In some cases they later repossess these homes.

“Lenders are looking for new ways to recover their money,” said Mr Sargent. “Now it is not just non-payment of a mortgage that can lead to repossession of homes – and banks like Northern Rock are leading the way.”



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More than 4,000 pubs will go out of business in the next two years as beer sales fall and higher bills crush profits, according to insolvency specialists at PwC.

Sixty-four pub businesses went bust in the third quarter – more than double the number in the same period last year and nearly triple the number in 2006.

Stephen Broome, PwC’s hospitality and leisure director, said: 'This is the start of a rapid period of acceleration of pub closures as more and more businesses give up the unequal struggle.'

A combination of factors, including the smoking ban and the aggressive marketing of alcohol by supermarkets, had helped encourage people to drink in their homes rather than pubs and bars.


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Virgin Media has secured approval from its banks to postpone repayments on its £4.3 billion debt until 2012, giving it an extra three years to refinance its loans.

The New York-listed group announced on October 13 that it was seeking to make changes to its debt package in light of the turmoil in the credit markets. It said then that it had the “unanimous support” of its ten biggest bank lenders.

The company, in which Sir Richard Branson is the biggest individual shareholder, was due to refinance its debt next year, ahead of a set of large repayments, including £1.1 billion in 2010 and just under £1 billion in 2011.

However, the company chose to bring forward talks with its lenders as a result of the credit squeeze. The banks are understood to be receiving fees of up to £70 million and a further £50 million a year in increased margins.

Analysts said that, although the move would leave the group with a large debt burden to pay off in 2012, the three-year delay would buy the company time to look at other options, including the sale of assets.

It is also hoped that Neil Berkett, chief executive of Virgin Media, will be able to bring the business to the point where free cashflow can cope with the repayments.

The group's debt is made up of just over £4.3 billion of term loans in A, B and C tranches, plus a £100 million revolving credit facility.

Fears over Virgin Media's high debt have weighed down its shares, with stock falling about 70 per cent in the past 12 months.

The decision to address the issue has been welcomed by investors. Shares rose 29 per cent on October 13 and a further 9.5 per cent to $6.31 in lunchtime trading in New York yesterday, although they had surged 30 per cent in pre-market trading.

The group said yesterday that it would provide a full update on the results of the amendment process when it announced third-quarter figures on Thursday.



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The latest insolvency figures to be released paint a gloomy picture for the West Midlands economy as the credit crunch continues to bite.

More than 500 businesses became insolvent in the region in just three months, an increase of nearly a third on the year before.

So far this year a total of 1,494 businesses have failed in the West Midlands – more than five a day, according to the figures published by global information services company Experian.

Nationally, the latest insolvency analysis showed that there were 16,591 UK business failures in the first nine months of 2008, representing a 22 per cent increase on to the same period in 2007.

In the last two months alone 5,957 businesses in the UK failed. Key sectors affected included Business Services with 1,284 insolvencies in the third quarter, taking the annual total for the sector to more than 3,550 failures.

Building and Construction saw 537 failures in the same time, while the Property sector, with 434 failures during the quarter saw its annual figure reach 891 failures, far more than double the figure in 2007.

Tony Pullen, managing director of Experian’s business information division, said businesses were going to have to be very careful about their margins if they were going to survive.

“Businesses, now more than ever, need to know who they are dealing with and that their customers and suppliers have the means to pay.

“Given the difficult trading conditions and rise in insolvencies, it is important that businesses take the right steps to safeguard the supply of their goods and services. The best approach is to continually monitor customers’ and suppliers’ commercial integrity against financial performance, credit risk information and payment behaviours. Access to this level of insight provides the intelligence to help businesses manage their exposure to risk.”

Research by information group Equifax claimed the West Midlands had so far avoided a major downturn, despite tough conditions.

But it said companies in the East Midlands were weathering the storm far better than those in the west of the region.

Business failures in the East Midlands fell by 1.3 per cent in the third quarter of the year compared with the first three months, Equifax said.

In the West Midlands the number of companies going bust rose by 10 per cent over the same period. But despite that Equifax said the region is still faring better than some.

Failures in the North East, the worst hit area, rose by nearly a quarter (23.4 per cent).

Both the Experian and the Equifax figures showed the worst-hit industries had been those involved in manufacturing and construction.



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A report by the Centre for Policy Studies (CPS) to be published on Tuesday will claim the responsibility for the banking crisis lies largely with the Labour Government's decision to remove responsibility for banking oversight from the Bank of England.

Its publication comes as surveys show collapsing consumer spending and business confidence, with company bosses becoming more cautious about their trading prospects and investment plans.

The author of the CPS report, ex-Conservative MP and former shadow chief secretary to the Treasury, Howard Flight, said that although the banking sector had to take some blame, Labour policies that led to excessive money supply growth, excessive borrowing and the assumption that "boom and bust had ended" were the chief reasons for the crisis.

Mr Flight said: "The responsibility for the probability of a UK banking crisis can be laid largely at the current Government's door. The roots are in mistaken monetary and economic policies and in regulatory failure.

"The Government's instruction to the Bank of England to meet a 2.5pc retail price inflation measurement was deeply flawed. It led to an excessive increase in the money supply, as a result of which banks lent incautiously."

Looking forward, Mr Flight calls for interest rates to be cut substantially to ward off the near-term risk of deflation. He also wants infrastructure investment financed by the private sector to be brought forward to stimulate the economy.

Furthermore, said Mr Flight, if the recession turns out to be as severe as the report anticipates, personal and corporate taxes should be cut, and more banking support should be offered to small businesses.

On public borrowing, Mr Flight accuses the Government of "gross mismanagement" of public finances. He claims the Government has put the recovery of the private sector at risk by not saving during the boom years and now planning a huge public-sector spending spree.

His comments come as a poll of 500 company bosses by the Institute of Directors found that the proportion who were preparing for worsening trading conditions hit a new high in September, prompting the institute to warn that its members were now preparing to "postpone or cancel altogether" significant amounts of business investment. Graeme Leach, the institute's chief economist, said: "The falls in business confidence and investment intentions take us into completely uncharted territory."

A negative balance of 37pc of those polled were less optimistic about their company's prospects, compared with -25pc in June. The balance of those who were less optimistic about the investment outlook fell to -48pc, from -34pc previously.

The survey follows a prediction from the insolvency profession that business failures will rise by 41pc on 2007 levels by the end of next year, an increase that its trade body R3 described as "catastrophic".

Official figures from the Insolvency Service are due out this Friday and are expected to show a significant jump on the 15pc year-on-year increase in insolvency seen in the three months to June.

Last week, Experian, the credit information group, said that it had recorded a 28pc increase in business failures between July and September compared with the same period last year.

Retailers, including some major high street players, are being hit particularly hard by the downturn.

The Confederation for British Industry reported on Friday that retail sales volumes fell for the seventh month in a row during October, with a balance of 27pc more retailers reporting weaker sales than a year ago, the same as in September.

Hitwise, which tracks UK internet traffic, found that even online retailers were being affected, with total traffic falling 0.5pc in October, the first annual decline this year.


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George Osborne has accused Gordon Brown of planning a "spending splurge" that will saddle two generations with debt.

The shadow chancellor told the BBC attempts to "spend your way out of a recession" would only lead to "huge debt" and higher taxes in the future.

Instead the Tories would "target" tax help such as freezing council tax and payroll tax for small firms.

But he was attacked by Labour and Lib Dem opponents for being "confused" and "out of his depth" in his analysis.

Instead of boosting spending to speed-up the economy, Mr Osborne said the Conservatives would "put money direct into people's pockets" by freezing council and business taxes.

Tax freeze

Ahead of a speech at the London School of Economics - his first since the row over his meetings with Russian billionaire Oleg Deripaska - Mr Osborne told BBC Radio 4's Today programme: "You can't spend your way out of recession.

"Let the Bank of England do its job, by cutting interest rates, and offer targeted help by freezing the council tax, but also keeping people in work by, for example, cutting payroll taxes for small businesses.

"And don't end up in a position where, because you have spent beyond control, borrowed without limit, you have saddled this economy with so much debt, that we spend a decade trying to get out from under the mountain of debt the government has left us with."

Liberal Democrat Treasury spokesman Vince Cable has been calling for a "drastic" cut in interest rates but Chancellor Alistair Darling has said it is a decision for the independent Bank of England.

Mr Osborne said in his speech that excessive borrowing would make it more difficult for the Bank of England to achieve "a sustained reduction in interest rates".

He said it would mean spiralling debt interest payments and tax rises for years to come and argue that a "spending splurge ... is the road to economic ruin".

'Poor judgement'

But Treasury Minister Angela Eagle accused Mr Osborne of being "all over the place and confused" in his analysis.

She told the BBC News Channel: "George Osborne didn't mention the international situation once in his speech. It just shows that he's all over the place, chasing quick headlines, with no coherent policy."

And Vince Cable said Mr Osborne had shown "poor judgement" throughout the economic downturn and accused him having nothing to offer families get through the tough times.

"George Osborne is clearly way out of his depth," said Mr Cable.

"His arguments on how to get us out of recession are entirely incoherent. He argues against continuing government spending on the basis that it will push up borrowing, then announces un-funded tax cuts which would do just that."

'Low debt'

Asked about the government's spending plans in Edinburgh, Mr Brown told local business leaders on Friday the government had cut national debt as a proportion of national income over the past decade.

He added: "We have low national debt in this country.

"In my view the only thing that you can do in circumstances where the economic activity that you need is not taking place in the market place at the level you want is to temporarily to make sure that you do something to increase that level of economic activity."

But he said you also needed to "make the right judgements" about where to spend the money in order to "make a difference" and said the government's recapitalisation of banks had made a difference and he hoped would eventually yield a return to the government.

In the same speech he said "the energy problem" with oil prices had to be solved adding: "It is a tragedy that the world is prey to one volatile commodity, that can disrupt businesses, disrupt people's lives, by a trebling of prices, over a very short period of time, and interestingly enough, an industry run by a cartel - not run in a free market way at all.

"And we've got to solve this energy problem because it's part of our climate change problems, but it's also part of this question about how affordable energy is for businesses and for individuals in the future."

Meanwhile, a YouGov poll for the Daily Telegraph suggests the Conservatives' lead over Labour has fallen from 24 points to nine, putting the Tories on 42%, Labour on 33% and the Lib Dems on 15%.


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A COUNCIL-OWNED waste disposal company is facing the threat of insolvency in 10 months, a confidential report reveals.

Urgent talks are taking place to bring AD Waste back under direct Flintshire County Council control, which would transfer the firm’s 47 workers, mainly binmen, back to the council.

AD Waste was set up 17 years ago as an “arm’s length” limited company, wholly owned by the council to collect and dump rubbish and run its recycling and civic tip sites. A consultants’ report on AD Waste says it has been a well-managed company.

But the company’s two landfill sites are full and it has to pay to haul thousands of tonnes of Flintshire’s waste outside the county to expensive landfill sites, mainly in Wrexham.

Its contracts with Flintshire end in September 2009, but its application to develop a state-of-the-art recycling facility and a new landfill at Alltami has to be decided by Flintshire council.

Preparing the applications has cost AD Waste £200,000 and developing the sites would cost a further £1.5m.

At the end of the last financial year the company submitted a claim to the county council to cover in-year losses of about £248,000. These losses have already been included in the council’s 2007/8 accounts.

The executive has been advised there may be further losses in the current financial year of £500,000.

A confidential report to Flintshire’s executive states: “This position is no longer sustainable and...on this basis the company will remain solvent for only 10 months.”

If the firm becomes insolvent, all operations will cease, all assets will be frozen and the council will have to make alternative arrangements for day-to-day waste collection. It would also inherit liabilities such as the long-term care of the worked-out tips.

Flintshire also needs to keep its options open for when local authorities in North Wales work out their long term strategy or waste disposal.

Flintshire’s Executive is understood to have accepted a recommendation that AD Waste be taken “in house” – back under direct council control. If workers are transferred back to the council, their pay and conditions have to be protected.

Nobody at Flintshire council yesterday was willing to discuss the issue.

Carl Longland, Director of Environment said: “The Council’s Executive considered a confidential report regarding AD Waste and it would be inappropriate to comment further at this stage. However, we will be meeting with AD Waste next week to discuss matters and anticipate making a joint statement about the situation. In the meantime, we confirm that AD Waste will continue to perform in its role as contractor to the Council and carry on its trade as normal.”



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Intel, the world’s biggest maker of computer chips, yesterday admitted that the current financial crisis could have a negative impact on its business.

The company said: "There could be a number of follow-on effects from the credit crisis on Intel's business, including insolvency of key suppliers resulting in product delays."

The gloomy outlook was in sharp contrast to statements made by company executives last month, when it said that its fourth-quarter sales may rise, signaling that the global financial crisis had not halted demand for personal computers.

Yesterday, however, Intel said it intends to publish a mid-quarter business update on December 4 as a result of the continuing uncertainty in the economy.

Paul Otellini, chief executive of Intel, told investors on October 14 that he did not expect a repeat of the situation in 2001, when spending on technology fell after the dot-com bubble burst.

He said there were “mixed signs”, with sales of notebooks by private customers helping to offset a slump in corporate orders.

Earlier last month, Intel trimmed its capital spending plans slightly for 2008 from $5.2 billion (£3.2 billion) to $5 billion.

The company has said fourth-quarter sales will be between $10.1 billion and $10.9 billion, compared with $10.7 billion last year, in line with analysts' predictions.

Intel share closed at $16.17 on Thursday on Nasdaq, up just over 8 per cent.



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